Fewest Firings Since 2007 Mark U.S. Job-Market Gains

Employees work on the front axle of a 2015 Chrysler 200 at the company's Sterling Heights Assembly Plant in Sterling Heights, Michigan, on March 14, 2014. Photographer: Jeff Kowalsky/Bloomberg

April 10 (Bloomberg) -- Fewer Americans filed applications
for unemployment benefits last week than at any time since
before the last recession, indicating bigger gains in hiring
will soon follow.

Jobless claims decreased by 32,000 to 300,000 in the week
ended April 5, the least since May 2007, seven months before the
worst economic slump in the post-World War II era began, a Labor
Department report showed today in Washington. Another report
showed rising gasoline prices were hurting consumer sentiment.

A drop in firings signal employers are optimistic sales
will pick up following a weather-related slowdown at the start
of the year, which will pave the way for bigger increases in
employment as demand rebounds. More jobs and growing incomes
would help lift confidence and provide a spark for consumer
spending, which makes up the largest part of the economy.

“I’m pretty optimistic about the labor market,” said
Thomas Simons, a money market economist at Jefferies LLC in New
York, whose forecast for 310,000 claims was the lowest in the
Bloomberg survey. “Slack in the labor force should start to be
absorbed more quickly, and that should put some upward on wages
as well.”

Stocks slumped, with the Nasdaq Composite Index sinking the
most since 2011, as technology shares resumed a selloff on
concern valuations are too high. The Nasdaq Composite fell 3.1
percent at 4 p.m. in New York. The Standard & Poor’s 500 Index
lost 2.1 percent to 1,833.09.

China’s Economy

Elsewhere today, there was additional evidence that the
world’s second-largest economy was cooling. China’s exports and
imports unexpectedly fell in March, according to figures from
the customs administration in Beijing.

The U.S. should lead global growth this year thanks to a
longer period of record-low interest rates orchestrated by the
Federal Reserve, stronger private demand and the end of a fiscal
drag that slowed economic improvement in 2013, the International
Monetary Fund said earlier this week.

The drop in jobless claims was larger than the most
optimistic forecast in a Bloomberg survey of 52 economists. The
median estimate called for 320,000, with estimates ranging from
310,000 to 330,000. The prior week’s figures were revised up to
332,000 from an initial reading of 326,000.

In another report today, consumer confidence declined last
week to a two-month low as rising fuel prices caused Americans’
views to sour.

Less Confident

The Bloomberg Consumer Comfort Index fell to minus 31.9 in
the period ended April 6 from minus 30 the prior week as views
on the economy, family budgets and the buying climate all
deteriorated. Perceptions of personal finances turned negative
for the second time in three weeks, dropping to the lowest level
since early November.

“Rising gasoline costs and falling equity prices are
likely exerting a gravitational pull on consumer sentiment,”
said Joseph Brusuelas, a senior economist at Bloomberg LP in New
York. Both the lower and upper ends of the income scale “showed
some visible discomfort due to declines in discretionary
spending power,” he said.

Since jobless claims can be volatile, it’s important that
last week’s drop is sustained. Because the Easter holidays occur
at different times from year to year, it’s difficult for the
Labor Department to adjust the data for seasonal variations.

“It’s even riskier than usual to put too much weight on
single observations at this time of year,” Ian Shepherdson,
chief economist at Pantheon Macroeconomics Inc. in White Plains,
New York, wrote in a research note. “We need to see a few more
weeks’ numbers before we can be sure where the trend now stands.
Our core view is that claims are drifting gently downwards,
consistent with our view that payroll gains are set to pick
up.”

Lower Average

Even smoothing through the ups and downs, the news remained
upbeat. The four-week average of claims, a less-volatile
measure, fell to 316,250 -- the lowest since the end of
September -- from 321,000 the week before. Excluding the period
last year when a change in computer systems caused a delay in
processing applications in California, the average would have
been the lowest since October 2007.

The number of people continuing to receive jobless benefits
decreased by 62,000 to 2.78 million in the week ended March 29,
the lowest since January 2008, today’s report also showed.

Further improvement in the labor market will probably help
sustain spending. Payrolls, excluding those at government
agencies, rose by 192,000 workers in March after a 188,000 gain
the previous month that was larger than first estimated, the
Labor Department said last week. Private employment exceeded the
pre-recession peak for the first time.

Jobless Rate

The jobless rate held at 6.7 percent last month as an
increase of about 500,000 people into the workforce was matched
by a similar gain in employment, last week’s report also showed.

Figures last week showed consumer spending is rebounding
from weather-depressed levels. Cars and light trucks sold in
March at a 16.3 million annualized rate, the fastest since May
2007, following a 15.3 million pace the prior month. Purchases
at General Motors Co., Ford Motor Co., Toyota Motor Corp.,
Nissan Motor Co. and Chrysler Group LLC all topped analysts’
estimates.

U.S. economic growth is projected to reach 2.7 percent this
year, according to a Bloomberg survey of economists, supporting
the Fed’s outlook that the economy has improved enough to
continue unwinding its bond-buying program.

The central bank announced last month a $10 billion
reduction in monthly bond buying to $55 billion and repeated
that it will taper purchases “in further measured steps.” The
committee announced $10 billion reductions in purchases at the
previous two meetings.